How has the child poverty rate changed between 1968 and 2020?

To better understand changes in child poverty rates over time, we compare two poverty measures: the Official Poverty Measure (OPM) and the Supplemental Poverty Measure (SPM) . The OPM provides a traditional poverty measure based solely on income, while the SPM provides a more comprehensive measure that accounts for family resources from government benefits such as food stamps and welfare cash assistance. By comparing two poverty measures, we can gain a more complete understanding of how governmental efforts to expand public benefits for families with children have impacted child poverty rates from 1968 to 2020.

Child poverty and its changes are deeply intertwined with historical events in the country. From 1968 to 2020, the country went through three critical stages: the launch of Welfare Reform in 1996, the Recession in 2008 and the Covid-19 pandemic in 2020. In 1996, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, which was known as “welfare reform” was launched to provide supports for most needy families, like single mothers and children. The child poverty Rates, both SPM and OPM dropped dramatically after the welfare reform act.From late 2007 to 2009 is the Great Recession period, which led to the most severe economic and financial melt down in the country. Child poverty rates, especially the OPM poverty rates, increased quickly during the period. During both the welfare reform and recession time, the child poverty rate by SPM is lower than it by OPM, which helps us better understand that the government benefits programs did lift up many poor families. In 2020, the COVID-19 pandemic hit the country and left a scar in the country’s economy. The child poverty rates by SPM has a significant decrease in pandemic, but the rate increased by OPM.

Families with children are poorer than families without children?

To understand child poverty rates within different family structures, we probed into the family resources by comparing the SPM poverty rates of families with children to families without children. The fundamental questions we ask are: what is the trend of poverty rate changes by family structure; and does having children lead to poorer families?

Prior to the year of 2000, the SPM poverty rate of families with children are way higher than families without children, indicating that families with children are poorer than families without children. In approximately 1983, the SPM poverty rate for families with children reached its highest at 20.6%. From 1993 to 2003, the poverty rate of families with children decreased drastically. The poverty rate of families without children continued to increase. Starting from 2006, the trend of poverty rate changes of both family structures started to align with each other. After 2007, the family with children started getting less poorer than those without children.The data indicates that government benefits supported poor families. In particular, those benefits increased support for families with children.

How much public transfers reduce child poverty?

We find that the SPM fell substantially over the past half-century. Now we want to know the role of each anti-poverty policy in preventing people from falling into poverty, which varies over time. To calculate the poverty reduction effect, we simulated two counterfactual poverty rates measured as SPM: one being the poverty rate if none of the programs existed in the U.S. ( red dot ) and the other being that if a given policy only existed ( orange dot ). The longer the grey line between the two dots, the greater the poverty reduction effects of the policy. In 1968, the poverty rate would have been high, up to 23%, without government transfers. Back then, cash transfers made the greatest contribution to reducing the poverty rate, followed by Social Security, Temporary Assistance for Needy Families (TANF), and Unemployment Insurance (UI), with a relatively small role of other non-cash benefits. In 2020, the poverty rate that we would have observed without any government transfers was about 15%. Cash transfer is still the strongest policy tool to reduce poverty in 2021, and its effect has grown even larger than in the past. The impact of other policies, such as in-kind benefits, unemployment insurance (UI), social security (SS), and the Supplemental Nutrition Assistance Program (SNAP), also grew compared to those in 1968. Notably, the importance of in-kind benefits, including health care and education services, has grown substantially between 1968 and 2021.

How does the child poverty reduction effects differ by states?

Each state has discretion in determining the generosity of its policies. By comparing the extent to which the sum of anti-poverty programs reduce the poverty rate across states, we can understand the range of the government’s capacity in lowering poverty. We use CPS-ASEC 2022 to calculate each state’s SPM with and without policies in 2021. The choropleth map visualizes the different levels of poverty reduction by state.

Conclusion

This study aimed to understand the temporal trends in the child poverty rate and the role of governmental efforts in reducing poverty. Through plotting the poverty rate with official and supplemental poverty measurements, we found that poverty rates change dynamically, along with policy reform, economic recessions, and health crises, and that the trend can look quite different depending on the measurement we use. Focusing on the supplemental poverty measurement, we analyzed the trend in poverty rate by different types of families: those with and without children. We identified that families with children were at higher risk of living in poverty until the late 1990s than those without children. However, the difference in the poverty rate rapidly converged throughout the late 1990s, coinciding with the welfare reform period. The decline in the supplementary poverty rate among families with children implies that government transfers played an important role. We then explored the role of each anti-poverty policy in detail. We found that cash transfer was the most influential policy tool to reduce child poverty in 1968 and 2020. The growth of in-kind benefits as a poverty reduction tool has been remarkable in recent years. Lastly, we mapped the regional variation in how each state reduced the child poverty rate in 2021. Some mid-west states close their child poverty rates by over 90%, showing that the upper limit of governmental anti-poverty efforts is high.

Poverty Measures

There are two different ways to measure the poverty rate. The Official Poverty Measure (OPM) is a metric used by the US Census Bureau to determine the poverty rate in the United States. It was developed in the 1960s and is based on pre-tax income thresholds that vary by family size and composition. The OPM does not take into account government benefits, such as tax credits or food assistance, or regional differences in the cost of living.

The Supplemental Poverty Measure (SPM), on the other hand, is a more comprehensive measure of poverty that takes into account both government benefits and regional cost of living differences. The SPM was developed in 2011 by the US Census Bureau and the Bureau of Labor Statistics, and it provides a more accurate picture of poverty in the United States.

The SPM uses a broader definition of income than the OPM, which includes non-cash government benefits like food stamps and housing subsidies, as well as cash transfers like unemployment insurance benefits. It also adjusts for geographic differences in the cost of living, such as housing costs, which can vary widely across the country.

Data

Our poverty estimates rely on two sources of data. For the historical trend of child poverty rate from 1968 to 2020, we used Historical Supplemental Poverty Measure (SPM) Data from the Center on Policy and Social Policy at Columbia University. It is an individual-level data that offers one’s poverty status and the information on the amount of income resources from various government benefits. We limited our analysis to children under the age of 18. More information on historical SPM data is available at https://www.povertycenter.columbia.edu/historical-spm-data.

The second data source is from the 2022 Annual Social and Economic Supplement of the Current Population Survey (CPS-ASEC), which collects all data necessary to estimate the 2021 poverty rates under both OPM and SPM. All data are downloaded from the University of Minnesota’s Integrated Public Use Microdata Series (IPUMS-CPS, University of Minnesota, www.ipums.org; Flood et al., 2022).

List of government benefits

There are two types of government benefits: in-kind transfers and cash transfers. In-kind transfers refer to any transfer of income that can only be used to fulfill a specific need (e.g., food, housing, etc). Cash transfers are income sources that can be spent at the discretion of the recipient.

The in-kind transfers we analyze include:

• Supplemental Nutrition Assistance Program (SNAP)
• Housing subsidies
• Free and reduced school lunch
• Energy subsidies
• Special Supplemental Nutrition Program for Women, Infants, and Children (WIC)

The cash transfers we analyze include:

• Social Security (SS)
• Supplemental Security Income (SSI)
• Temporary Assistance for Needy Families (TANF)
  • Aid to Families with Dependent Children (AFDC) until 1996
• Unemployment Insurance (UI)

Our analysis examines the individual and combined effects of these various government transfers on child poverty reduction.

Jiwan Lee

School of Social Work jiwan.lee@columbia.edu

Eunho Cha

School of Social Work eunho.cha@columbia.edu

Yihang Sun

School of Social Work ys3514@columbia.edu